This blog looks at the insurance industry's knowledge of the harmful health effects of exposure to asbestos and other related topics.

August 01, 2011

Marsh and Forster 1940s-1960s

In the mid 1940s Marsh & McLennan, the predecessor to Marsh, began conducting what it self described as “illegitimate business” on behalf of entities including asbestos litigation defendants such as Foster Wheeler Corporation, The Ruberoid Company and Chubb & Son. For many years – the exact number or years has not been determined but at least exceeding 15 years – Marsh obtained insurance coverage for entities through fraudulent means through an entity in Canada in violation of state insurance laws of the United States.

In the 1980s, Mr. J. Douglas Paterson testified that: He was employed with the Forster Insurance Group in Canada until 1962. Mr. Paterson held different positions over the years and traveled at times to the Marsh & McLennan offices in the United States. Mr. Paterson described the business of Forster during the years 1948 to 1962 as being a "facility or conduit” to channel Marsh & McLennan business into the London insurance market.

Mr. Paterson described the umbrella insurance placement and renewal process as follows: Initially, Forster would obtain underwriting information regarding the insured. This information would be submitted by the Marsh & McLennan office handling the account in the form of a questionnaire or over the telephone. Mr. Paterson testified that this information was always provided by Marsh & McLennan. Mr. Paterson recalled working with several Marsh & McLennan employees from Marsh & McLennan 's New York office. Upon obtaining full underwriting information, Forster would send that information to London.

Forster's next involvement included receipt of price information, Mr. Paterson always forwarded this information to Marsh & McLennan. A cover note was sent on to Marsh & McLennan and eventually an official policy would be received, which was sent both to the client and Marsh & McLennan.

With respect to umbrella placements Mr. Paterson did recall in some instances "direct communications" with the client as opposed to Marsh & McLennan. Mr. Paterson characterized these communications as a sham intended to create the illusion that Forster was dealing directly with those clients when in fact all of its dealings were with Marsh & McLennan. He described this arrangement as a "subterfuge" intended to aid Marsh & McLennan in its evasion of domestic insurance laws precluding its placement of insurance in the London Market. He recalled that this subterfuge was in particular use by Marsh & McLennan 's New York office.

Mr. Paterson stated that with respect to all umbrella insurance placements Forster made on behalf of Marsh & McLennan during the 1948 to 1962 time period, Marsh & McLennan was the producing broker. Mr. Paterson stated that it was his understanding-- as well as common knowledge at Forster during that time period--that the entire producer's commission was passed on to Marsh & McLennan.By this arrangement, Marsh & McLennan was put in the same position it would have been has it been dealing directly with the London brokers.

Mr. Paterson stated that he was generally aware of the fact that at some time during the 1950's, Forster sent documents to the homes of Marsh & McLennan employees rather than to their business address. Mr. Paterson did not recall being personally involved in this practice but he understood it to be part of the subterfuge employed by Marsh & McLennan to disguise its involvement in the placement of the insurance.

Mr. Paterson stated that there has never been any question in his mind that Marsh & McLennan was the producing broker in the umbrella insurance placements which Forster was placing in the London market during the 1950's and that there has never been any question in his mind that Marsh & McLennan was receiving commissions on all of those placements.